At Adobe Summit the world’s largest Digital Experience Conference—Adobe released new US e-commerce insights into recent changes in the Digital Economy. The report reveals resilient online shopping demand for groceries and home furnishings, categories that previously struggled to gain traction, and reflects the lasting impacts of pandemic-related habits. Yet at the same time, continued economic uncertainty is driving many shoppers to delay payment for purchases by leveraging Buy Now Pay Later options online.
Based on Adobe Analytics data, the report provides the most comprehensive view into U.S. e-commerce by analyzing commerce transactions online, covering over one trillion visits to U.S. retail sites, 100 million SKUs and 18 product categories. Adobe Analytics is part of Adobe Experience Cloud, relied upon by over 85% of the top 100 internet retailers in the U.S.* to deliver, measure and personalize shopping experiences online.
Home Furnishings and Groceries Driving Growth Online
In 2022, consumers spent over $126 billion on home furnishings, a 10.2% increase year-over-year (YoY), as well as $86.8 billion on groceries, a 10.8% increase YoY. This strong growth contrasts with electronics, which remains the top category by total spending ($202 billion), but grew more modestly at 4% YoY. Similarly, though apparel was another major category and drove $171.8 billion in 2022 spending, the number fell by 3.8% YoY.
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These trends have persisted in recent weeks: In February 2023, the home furnishings category grew 12.9% YoY, driving $9.4 billion in spending for the month. Groceries grew even more substantially at 26.7% YoY, driving $8.4 billion in spending. Demand for electronics slowed following a record holiday shopping season, falling 5.4% YoY to $13.6 billion, while apparel fell 0.6% YoY, driving $11.3 billion in February spending.
“E-commerce demand has remained resilient in an uncertain economic environment, driven in part by lasting pandemic habits where consumers had no choice but to leverage online food and home furnishing shopping services,” said Vivek Pandya, lead analyst, Adobe Digital Insights. “Now consumers have embraced the rich e-commerce experiences that made them feel comfortable getting these necessities delivered to their doorsteps, making these categories new growth drivers in the Digital Economy.”
Buy Now Pay Later Continues to Grow
Rising costs-of-living have pushed consumers toward Buy Now Pay Later (BNPL) services that enable them to pay for purchases over time. In 2022, the share of online purchases using BNPL grew by 14% YoY, with revenue from BNPL growing 27% YoY. In the first two months of 2023, BNPL order share was up by 10% YoY, though revenue fell by 19% YoY, indicating that consumers are using this payment method for smaller purchases.
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To understand the types of goods shoppers want to delay payment for, Adobe also looked at BNPL usage across major categories including groceries, home furnishings, apparel, and electronics. In the first two months of 2023, groceries’ share of BNPL orders grew a staggering 40%, while home furnishings grew by 38%. By contrast, apparel grew by 8%, and electronics fell by 14%.
“The rise of Buy Now Pay Later usage for groceries tells us that consumers are likely making bigger purchases online to take advantage of special promotions and stock up on staples, thus managing living expenses in more flexible ways,” explained Pandya. “The strong online growth of home furnishing purchasing is expected to bolster Buy Now Pay Later adoption, given the higher ticket prices in this category.”
Additional Insights from Adobe Analytics
- Mobile Shopping Expected to Overtake Desktop in 2023: As consumers embrace new categories and ways to make payments online, they are also doing so on smaller screens. The last holiday season was a turning point for mobile shopping, where the majority of sales (51%) on Cyber Week came through smartphones for the first time. In 2022, smartphones drove 45% of overall online sales, but on the current growth trajectory, Adobe expects that every month will see smartphones drive the majority (over 50%) of online sales by December 2023.
- Smaller Retailers Struggle on Mobile: Larger retailers (over $1 billion in annual sales) are seeing more success with mobile shopping, driving 38% more visits that result in purchases compared with smaller retailers (between $10 million to $50 million in annual sales). The share of revenue from sales through smartphones is also 8.6% lower for smaller retailers – an opportunity for these brands to connect with customers on smaller screens.
- Consumers Embrace Less Costly Goods: Adobe found that elevated prices online, as tracked by the Adobe Digital Price Index (DPI), are impacting the types of products that consumers are drawn to. Adobe’s DPI provides the most comprehensive view into how much consumers pay for goods online, complementing the Bureau of Labor Statistics’ Consumer Price Index, which captures offline prices. The DPI shows that from January 2019 through February 2023, the cheapest pricing tier grew its share of sales significantly across categories including groceries (up 35.6%) and electronics (up 57.1%).
- Demand Slumps for Curbside Pickup: In 2021, 23% of online orders leveraged the curbside pickup option (for retailers who offered the service); This fell to 19% in 2022, and in the first two months of 2023, this fell further to 17%. Consumers tend to leverage the service more for groceries, which saw its share of curbside pickup orders grow 8% YoY in early 2023—compared to a category like electronics, which grew by only 2% in the same period. Once considered a safety necessity during the COVID-19 pandemic, curbside pickup is struggling to provide lasting value to consumers. This presents an opportunity for retailers: Shoppers who leverage curbside pickup rather than shipping to their homes may buy additional items once they’re at the store.
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